Investments spent on Ferrari

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Investors who placed $580,000 with RAN Holdings International Pty Ltd and Radisson Maine Property Group (Australia) Pty Ltd have discovered the money was spent on running expenses, the NSW Supreme Court was told yesterday.

A $250,000 Ferrari and two BMWs were leased with the cash provided by the 13 investors, while money also was spent on a Chieftain aircraft, according to David Stack, counsel for the Australian Securities and Investments Commission, which has applied to have the companies wound up on the grounds of insolvency.

The companies deny this and are opposing the application.

Investors were recruited through pamphlet drops at shopping centres, railway stations or Jeff Fenech boxing tournaments. Mr Fenech is also an investor in the companies.

They were offered a choice of three products: purchase of a house and land package; a joint venture agreement whereby RMPG and the investor jointly developed a property and, on sale, shared profits equally; or investing funds with RAN for about an 8 per cent return.

Robert Bassili is a director of RMPG and Nicholas Popov is a director of RAN Holdings. Other companies in the group include a mortgage broker and a financial strategist.

Radisson Maine was taken to task last year by the NSW Department of Fair Trading for claiming that it had affiliate offices in Geneva, London, New York, Canberra, Melbourne and Toronto and had been in operation since 1964. All untrue.

Among the services it claimed to provide were tax minimisation, superannuation, mortgage reduction, home and investment loans, debt consolidation, shipping and cargo. This also proved to be untrue.

Additionally, the companies hold no investment or real estate licences.

The provisional liquidator, David Lombe of Deloitte Touche Tohmatsu, has tendered a report which shows that RAN at June 11 had an asset deficiency of $562,270 and RMPG had net asset deficiency of $1.2 million. If the two companies were wound up the combined asset deficiency would climb to $5 million, Mr Lombe estimates.

Outstanding payments included $60,000 for superannuation, $19,818 in employee entitlements and tax liabilities of $71,764. Mr Lombe's report said no tax returns, payroll tax returns or business activity forms had been prepared or lodged by the companies.

"These companies are not presently able to pay out their debts," Mr Stack said.

Out of 13 land and home package transactions for which investors had signed up, only one has been completed. Justice Mahla Pearlman reserved her judgement on the wind-up application.